Small businesses reduce zero-hours contracts to improve employment culture

Small businesses reduce zero-hours contracts to improve employment culture

Eight in 10 small firms no longer use zero-hours contracts since their controversial use came into the public spotlight last year, new figures reveal.

The Federation of Small Businesses (FSB), which published the research, found that small employers are “steering clear” of hiring staff on non-guaranteed hours.

Likewise, six in ten small businesses said they were paying every employee at least £7.83 per hour before this year’s National Living Wage (NLW) rate came into force in April, despite taking a hit financially.

Its research shows that small businesses have seen their wage bills rise as a result of the rise in the NLW, with seven in 10 saying it has reduced profitability. Moreover, four in 10 are increasing prices and one in three are “curtailing” investment plans.

In particular, the hospitality and retail sector say they have taken a big hit in their ability to make ends meet.

FSB chairman, Mike Cherry, said: “The vast majority of small business owners absorb rising wage bills by taking less for themselves. Ultimately though, high employment costs dent the ability to invest in productivity-enhancing tech, innovation and training.

“Our high streets are up against a perfect storm of surging business rates, high inflation and rising employment costs. Childcare providers are also struggling to keep their heads above water.”

Despite this, Mr Cherry said most small businesses are now creating an employment culture which works for both the employer and the workforce.

“Small firms often play host to the kinds of supportive, flexible and family-centred working environments that can be found lacking in big corporates. What today’s findings show, once again, is that they also reward staff fairly,” he said.

The FSB said it is now turning its sights to improving poor wages for those in apprenticeships. It said the Government should bring the Apprenticeship Minimum Wage (AMW) in line with the NLW rate.

Mr Cherry said: “Young people taking on apprenticeships should not be paid so little. If we really want to create parity of esteem between academic and vocational routes into work, then paying apprentices £25 a day is not helpful.”